Japanese
beer giant Kirin plans to pur­chase 51 percent of the Mandalay Brewery
for around $4.3 million, a move which would con­solidate its position in
the Myanmar beer mar­ket, according to a senior executive of Myanmar
Brewery Limited.

The purchase would see the brewer take con­trol of Myanmar's oldest
brewery through a new joint venture with its cur­rent owners, the
military-owned Myanmar Eco­nomic Holdings Limited (MEHL), Hiroshi
Fujik­awa, vice chairman of My­anmar Brewery Limited, told Myanmar
Business Today.

“We're trying to set up a joint venture... make a new company with
MEHL, it's not an acqui­sition,” said Fujikawa. “We've just submitted an
application to the Myan­mar Investment Commis­sion so we don't know yet
when the date of incorpo­ration would be,”

If the purchase gets ap­proved, Kirin would hold a majority stake in
90 percent of Myanmar's le­gal beer market, but, Fu­jikawa estimates,
illegally brewed beer accounts for up to 20 percent of the total market
in Myanmar, which puts Kirin's actual market share far lower, he said.

In 2015, Kirin asserted its dominance over oth­er recent
international entrants to Myanmar's beer market, Denmark's Carlsberg and
the Neth­erlands's Heineken, when it purchased a majority stake in
Myanmar's big­gest brewer, Myanmar Brewery Limited.

The $560 million stake in the Myanmar Brewery which produces Myanmar
Beer, put Kirin in control of an 80 percent share of the local market.

Just like the ubiquitous Myanmar brew, albeit less popular, Kirin
plans to continue producing Mandalay Beer in order to maintain Kirin's
“close relationship and good chemistry” with the My­anmar people, said
Fuji­kawa.

“We all understand the competition in the beer industry here in
Myanmar is becoming more and more tough and fierce be­cause of the new
comers. So we're happy to support the Mandalay brand and keep it in the
market,” he added.

Considering the rela­tively small size of the in­vestment and
Mandalay Brewery's small market share, Kirin hasn't made a short term
outlook on possible returns, but re­mains “optimistic”. Kirin plans to
operate the two brewery's independently of each other but a merger
between the two remains “a possible option” de­pending on time and
reg­ulations, he said.

In 2014 Myanmar con­sumed 210,000 kilolitres of beer, about one tenth
per-capita of its regional neighbors Thailand and Vietnam. However,
Kirin eyes Myanmar as a mar­ket with much potential in the wake of
falling sales in Japan, and the immi­nent sale of Kirin's failing
Brazilian breweries, ac­quired for $3.4 billion in2011, to rival beer
maker Heineken.

“Japan is declining, the market is shrinking, so it's important for
Kirin group to have an emerg­ing, high growth market,” said Fujikawa.